Forex Trader

I am learning new things every day and one definite conclusion I have reached about the Forex industry is that it is diverse. There are Forex solutions for every type of trader. Traders that are very mobile, as in they travel  a lot have Forex Web based trading platforms. Traders that have very little money to invest have mini and micro accounts. The latest thing I discovered is that people who do not want to pay or receive interest of any kind, whether it be for personal, financial, or even religious reasons, have Forex Islamic accounts.

These accounts are open to anyone, not just Muslims. The reason they are called that is because they were designed to meet the needs of the Forex Islamic community who are prohibited from taking or paying interest of any kind according to Shariah law.

What this means is that when a trader leaves their position open over night, and would have to pay rollover fees in a standard Forex account, in a Forex Islamic account, these fees are waved.

As mentioned, anyone can open a Forex Islamic account, but there are some disadvantages as well such as higher spreads, so think twice before going down this route.

You probably noticed (assuming anyone is actually reading this) that I have not posted here in quite a while. The reason for this is because I was so caught up in learning the ropes of Forex trading, that I neglected the desire to write down my thoughts and experiences.

This is bad, very bad. It is not only bad because you had no reading material but it is bad because writing down your Forex trading mistakes and experiences is something every trader should be doing regularly.

One of the many things Forex experts tell you to do is keep a Forex journal. Record your every trader, your thoughts and contemplations when it comes to trading Forex. If you do write down everything you do in your trading, you can always look back and learn from your experiences.

If however you neglect this important habit, you will find that you repeat the mistakes that led you to Forex losses in the past. It might not be an easy thing to do to stop trading and start writing, especially when you are in the middle of a huge trend, but you will find that this method is very effective in keeping you above the violent waters of the Forex market.

I hope to take my own advice and continue writing here regularly.

The Web is overflowing with good Forex advice and tips. I have and continue to read for hours a day of what people have learned from their Forex experiences whether good or bad. However, one of the best pieces of advice that most people do not emphasize enough is to use Stop Losses.

Let’s be honest here, one thing all Forex traders have in common, no matter what strategy or type of analysis they use, is that they want to make money. No one likes to lose. The best way to avoid Forex losses is to use this powerful tool that is found in every Forex trading platform I have ever encountered. First thing you should do when opening a trade is put a Stop Loss in place.

Where to put is another question, but the important thing is your put it somewhere. Stop Loss is a tool that enables you to ensure that your losses do not spin out of control. Basically, you define where you want to place the Stop Loss, but just keep in mind that if you do not give your trade enough flexibility to move around, the second the currency declines even the slightest bit, your trade will automatically be closed, which does not give your investment the time it needs to jump back.

So place your Stop Losses in a place that will allow minor losses, but not beyond that. The name of the game is deciding what you are able to lose. What can you afford to say goodbye to without losing the ability to feed your family that week? This is what is called responsible trading. You need to ask yourself before getting into Forex, what kind of trader you are and what kind of money you want to invest. This all needs to be done with the thought that there is always a chance you will lose that money

In addition to educating yourself on the market, a trader has to make many more decisions before beginning to trade. One of those decisions is the tools to use in order to analyze the market and make educated decisions on what and how to trade.

There is a long term debate in the Forex world between two schools of thought. However, before we get into the two philosophies, let me just say that according to all the Forex experts, if you do not analyze the market, learn the trends, and make educated decisions as to what currency to trade and how much, you are bound to end up like the other 90% of Forex traders who end up closing up shop in no time.

So, what are the two opinions? The first school of thought is based on the premise that “The Trend is Your Friend”. What does that mean? Basically, the entire world of technical analysis, with all its complicated Forex charts, trends, indicators, and tools is based on the concept that if the market is going in one direction, there is no logical reason it should reverse. Now this is obviously not an absolute principle since eventually it does reverse, but technical analysts will claim that this reversal wont occur for no reason. So the technical analysis concept dictates that one analyzes the movements of the market and trade accordingly.

On the flip side, the world of fundamental analysis claims that all the trends we use in technical analysis happen as a result of the latest news and current events. At the end of the day, according to the fundamental analysts, it is more effective to focus your attention on the news and latest global events, than to spend your time reading complicated charts.

These are obviously very basic and elementary explanations of the two possible analysis options for the Forex market, but putting aside all the small details, this is what it comes down to.

In summary, while there are those that swear by technical analysis and those that only focus on fundamentals, the best option is clearly to balance the two. If you can split your attention to a screen with the latest charts and a screen with the latest news, you are in the best possible shape to trade Forex successfully.

If you, like me, are new to Forex trading, chances are that you were drawn in by some of the aggressive Forex marketing schemes used by Forex brokers and service providers on the Web. These brokers spends millions of Dollars trying to create the illusion that Forex trading is a quick road to riches, and that if you trade with their brokerage, you will make millions in no time.

This is of course, not the case, but it can be. As you probably know, if you have any life experience at all, nothing in life is free. The same is true for Forex. There is money to be made, but it won’t come unless you spend the time and effort learning how to master the Forex market.

There are of course many ways to do this (did you really think it would be easy?). You can spend months and months reading online and offline articles, you can and should learn all you can from the experts out there, but there is now a new resource available to you that was not in existence just one year ago.

It is no secret that the new trends on the Web are all about social media, community, and communication. Well, that trend is making its way to Forex as well. While the various social networks have not yet taken off in the Forex world and the average Twitter user for example, still associates Forex with spam, Forex community sites are now popping up all over the Web.

Why are these sites important? Well, while all the above methods are effective when learning Forex, nothing beats learning from other people’s mistakes or smart decisions. The ability to communicate in real time with other traders, see what they are doing, what currencies they are buying, and if they are succeeding is a crucial and highly effective resource for the new and experienced trader.

I have been checking out Currensee for a few weeks now, and let me tell you, I am impressed. This is just one example of course, but I think, based on the number of traders they claim to have, it is the leading Forex “social” platform/network on the Web today.

Whether you use Currensee or a different site, the important thing is the principle. You are not alone and there is no reason you should not take full advantage of that fact and benefit from your surroundings.

Forex, it turns out, is not something you can master in a short period of time. In fact, I would go as far as to say that most Forex traders do not know a fraction of what there is to know about Forex. There is so much information out there and to become a true Forex expert, it might take the average person up to a few years. While learning how to trade or the basic principles that guide the currencies are concepts you can understand on a very basic level after only a few months of learning, the depths of Forex trading cannot be grasped in such a short period of time.

Putting aside all the research one has to do before trading Forex, let’s skip ahead for a second and talk about the trading itself. So, let’s pretend you have spent the time and now consider yourself a master of Forex. Now what? How do you start trading? Well, even to that question, there are many possible answers.

You can open an account with a Forex auto trader, thereby avoiding the hassle of being stuck at your monitor to see what your currencies will do next. Another option is to register with a signal provider. That enables you to receive expert tips on what position to open and when. This method is effective in that it enables new traders to make use of the expertise of more experience Forex traders.

There are many more trading options available to the trader, but that is a topic for another time. I thought I would talk a little bit about the standard trading option for retail traders, Forex brokers.

When choosing a broker, there are many factors a trader must take into account. However, one of, if not the most important things to pay attention to when selecting your Forex broker is their trading platform. Trading platforms are complicated products that one could write a whole book about, but I am going to focus on one specific factor of trading platforms.

There are two basic models for Forex trading platforms, online (Web-based) and downloadable. You might have heard of the famous Meta Trader 4 Forex platform. The MT4 is a platform that requires a user download and is stored locally on the trader’s computer.

The advantage of such a platform is that it operates independently of a server. Whereas a Web based platform is completely dependent on the speed and reliability of the server, the MT4, or any other native platform operates based on the capabilities of the computer on which it is hosted.

On the flip side, the trader can access their platform on their computer only whereas a Web based platform can be accessed from any Web-enabled device from anywhere in the world.

The choice between a Web based Forex platform and a native one is very much dependent on a trader’s needs, and anyone that tells you that one is better than the other is simply wrong. If you are a mobile person who moves around a lot and needs flexibility in your Forex trading, Web based is better for you. If, however, you trade at home and need speed, reliability, and utmost security, a native platform like the MT4 might be more up your alley.

This is really a very  basic overview of one issue among many when selecting a broker, but it is nonetheless a very important one to understand when making one of the most important decisions of your Forex career.

As a brand new Forex trader, or at least someone who has decided he is going to trade Forex, I did not know where to start. There was so much reading material on the Web, and I found myself overwhelmed. So, I took a deep breath, and started Googling words like “Forex first steps” or “How to get started in Forex”.

The results were many, and I knew I had a lot of reading to do. I started sifting through the results, and recording what I was reading in the back of my head. While I encountered many different views as to the number one most important tip for Forex success, I started noticing a pattern among many of the leading sites.

The one thing that I found in common in almost all the articles I was reading was that almost all Forex experts claim that trading without emotion is crucial for ones Forex success. The consensus among experienced Forex traders is that one of the main reasons most new traders fail in Forex is because they let their emotions get the best of them.

Every article I read emphasized the importance of trading in the most objective way possible. The problem, they all explained, is that we are all human beings with human emotions. How does one control that? Can you control who you love or who you hate? I think the world would be a much better place if you could choose those emotions.

So how is it that Forex experts are telling you to control your emotions? This was the main question I had after reading these articles. So, I decided to read some more to find the answer.
The answer is quite simple, there is no way a person can truly control their emotions. Wait, but that is what we, as traders, are being told to do, isn’t it? Well, yes and no. We need to leave our emotions out of the picture, but we can only do that with external help.
The way Forex platforms are engineered, there are many different Forex tools that enable you to trade without emotion. Let me give one example by painting out a certain common scenario.

Imagine you open a trade in which you buy $10,000 USD against the EUR. You invest $100 and trade with a 100:1 leverage. Before I continue, let me just point out that these numbers are actually not a very responsible way to trade since with high leverage comes high risk, but that is a topic for a different time.
Anyway, the USD begins to rise and you begin counting your profits. You are feeling extremely satisfied with yourself and your Forex trading abilities. You are convinced you are going to be one of those success stories in which a person makes millions almost instantly.

However, then something happens that changes the whole picture. The value of your currency reverses its trend and starts its decline. Now, here is the thing, how do you know what to do? Should you pull out and close the position out of fear that your are on a slippery slope or do you stick it out with the hope that it will reverse itself? Either way, you are at the mercy of your emotion. If you close the position, it is out of fear, and if you stay in, it is out of greed. Both are points of weakness, and should not be the way you make decisions in Forex trading.

What you should have done from the second you opened the position is put a “Take Profit” in place. A “Take Profit” is a Forex tool in which you define how much you want to profit in order to make the trade a success. At that value that you hope to reach, the trade is automatically closed. This way, you let your strategy work on auto pilot and thereby trade like a pro.
This was just one example of a way to trade without emotion, and there are many more. However, the important thing is that if you are trading Forex, you want to do it with as much objectivity as possible. Leave your emotions for other areas in your life, it does not belong in the trading room.